Are there Returns to Experience at Low-Skill Jobs? Evidence from - - PowerPoint PPT Presentation

Are there Returns to Experience at Low-Skill Jobs? Evidence from Single Mothers in the United States over the 1990s Adam Looney, Brookings Day Manoli, UCLA May 2012

Introduction

• Many economic policies seek to promote self-sufficiency amongst

low-income individuals

• Design incentives to provide benefits & encourage work
• Individuals will reap the rewards of work experience in the form
• f higher wages and enhanced job opportunities
• Transition off of government assistance and to self-sufficiency

Introduction

• Evidence on returns to experience
• Do wages increase with experience?
• Altonji & Shakotko 1987, Topel 1991, Altonji & Williams 2005
• Are returns similar across high-skill and low-skill individuals?
• Loeb & Corcoran 2001, Gladden & Taber 2000: even amongst

low-education individuals, wages increases with experience

• Burtless 1995, Card & Hyslop 2005, Dustman & Meghir 2005

indicate lower returns to experience for low-skill individuals

Introduction

• This project: examine returns to work experience due to policy

changes in US over the 1990s

• Policy changes to encourage transition from welfare to work
• Largest policy-induced change in work experience
• Permanent change in incentives (Canadian SSP provided

temporary incentives for employment)

Introduction

• Motivating thought experiment:
• Consider a single mother with 10 year-old child in 2000
• Compare to single mother with 10 year-old child in 1990
• Because of policy changes, 2000 mother has completed more

employment over the child’s first 10 years

• What are the returns to this policy-induced experience? Are

real wages for the 2000 mother higher than real wages for the 1990 mother?

• Previous research suggests relatively high returns (≥ 7%) for

welfare recipients (Light and Ureta 1995, Ferber and Waldfogel 1998, Lynch 2001, Grogger 2005)

• Overall, results show low returns to experience for single mothers

Outline

• Background
• Policy Changes
• Single Mothers Employment and Welfare Use and the Age

Structure of Children

• Empirical Analysis
• Estimation Strategy: Synthetic Cohorts
• Graphical Evidence
• Regression Analysis
• Discussion

Background: Pre-Reform (1980s, early 1990s)

• AFDC & Food Stamps: cash payments to families with (school-age)

children whose parents are absent or unemployed

• Benefits phased out with earnings  implicit tax rate on earnings
• Concerns regarding disincentives for work

Benefits Earnings

Background: Policy Changes

• JOBS90: states required to provide education, training &

employment programs for AFDC recipients

• AFDC waivers:
• Between 1993 & 1996, states given waivers from federal AFDC

program to experiment with program changes

• Work training requirements (27 states)
• Time Limits (24 states)
• PRWORA 1996: (97) replaced AFDC with TANF, state block grants
• EITC Expansions:
• TRA86: expanded benefits by 50%
• OBRA90: expanded by 50%, phased-in over 3 years 1991-94
• OBRA93: expanded by 50%, phased-in over 3 years 1994-96

Background: Post-Reform (late 1990, 2000s)

• Emphasis on incentives to encourage work
• 0 benefits for individuals with no earned income
• Negative marginal tax rate in phase-in region
• Single mothers faced different policy environment after the policy

changes in mid-1990s, had different employment histories than single mothers prior to the mid-1990s

Benefits Earnings

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Strategy to estimate return to experience will exploit policy-induced

variation in employment by age of youngest child

• Ideally, use individual-level longitudinal data over this time period
• Panels with appropriate sample sizes and ability to identify age
• f youngest child are not available
• Use repeated cross-sectional data from Current Population

Survey, 1980-2010

• Supplemental analysis using short panels from Survey of

Income and Program Participation

Survey Year N % Non- white Fraction with ≤12 years of Schooling Median Mother's Age Fraction with Age

• f Youngest Child

≤ 5 Fraction in Full-time Employment in Previous Year Median Wage, CPI-adjusted 1990 1447 0.613 0.773 27 0.655 0.345 10.378 1995 1722 0.546 0.678 28 0.650 0.347 9.403 2000 1712 0.515 0.635 28 0.605 0.488 10.296 2005 3009 0.497 0.612 28 0.617 0.454 10.915 2010 3324 0.451 0.563 29 0.601 0.408 11.218 Table 1: Summary Statistics for Never Married Mothers Notes: Data from IPUMS CPS. The sample is restricted to never married mothers between ages 19 and 44. See Table A1 for sample restriction details. Median weeks worked and median wage are conditional on employment. Wages are CPI- adjusted to 2009 dollars. Wages are computed as total wage and salary income divided by the product of weeks worked and usual hours worked per week.

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Follow methodology from Meyer (2010) to illustrate variation in

employment and welfare use by age of youngest child

• Ei = employment indicator
• yngchi = age group of mother’s youngest child (0-5, 6-12, 13-18)
• Xi = (demeaned) covariates: dummies for marital status (divorced,

widowed, never married), race, age, education, number of kids

2010 , 5,6 12,13 18 1980

1( )*1( ) .

i n t i i i i a t

E year t yngch a X γ δ ε

=≤ − − =

= = = + +

∑ ∑

Single Mothers’ Employment Rates by Year and Age of Youngest Child

Education ≤ 12 years, Married Mothers Employment Rates by Year and Age of Youngest Child

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Many previous papers have examined single mothers’ employment

patterns by number of children

• General strategy: exploit variation in benefits based on number
• f children to estimate labor supply effects of policy changes
• Eissa & Liebman 1996
• Ellwood 2000
• Meyer & Rosenbaum 2001, 2000
• Eissa & Hoynes 2004, 2006
• Grogger, Karoly and Klerman 2002
• Grogger & Karoly 2005
• Xi = dummies for marital status (divorced, widowed, never

married), race, age, education

2010 , 0,1,2, 3 1980

1( )*1( ) .

i n t i i i i n t

E year t Nkids n X γ δ ε

= ≥ =

= = = + +

∑ ∑

Single Mothers’ Employment Rates by Year and Number of Children, With Controls See Meyer (2010)

Married Mothers’ Employment Rates by Year and Number of Children, With Controls & Education <= 12 See Meyer (2010)

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Heterogeneity in employment changes based on age of the

mother’s youngest child is robust to including interactions with number of children

2010 , 5,6 12,13 18 0,1,2, 3 1980

1( )*1( )*1( ) .

i n t i i i i i a n t

E year t Nkids n yngch a X γ δ ε

=≤ − − = ≥ =

= = = = + +

∑ ∑ ∑

Single Mothers’ Employment Rates by Year and Number of Children Age of Youngest Child = 0-5

Single Mothers’ Employment Rates by Year and Number of Children Age of Youngest Child = 6-12

Single Mothers’ Employment Rates by Year and Number of Children Age of Youngest Child = 13-18

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Why were single mothers with young children differentially

affected?

• Need to care for young children raises opportunity cost of work
• Mothers with young children had high rates of welfare use

Single Mothers’ Welfare Use by Year and Number of Children Age of Youngest Child = 0-5

Single Mothers’ Welfare Use by Year and Number of Children Age of Youngest Child = 6-12

Single Mothers’ Welfare Use by Year and Number of Children Age of Youngest Child = 13-18

Ranking State Fraction Reveiving Welfare N 1 Nevada 0.136 110 2 Alabama 0.155 193 3 Idaho 0.173 104 4 Virginia 0.183 115 5 Texas 0.212 628 14 North Carolina 0.255 436 15 Kansas 0.257 136 16 Florida 0.265 578 16 Oklahoma 0.265 136 24 Mississippi 0.308 237 25 Hawaii 0.309 94 26 New Jersey 0.311 440 33 Wisconsin 0.338 151 34 District of Columbia 0.345 177 35 Tennessee 0.355 169 36 Oregon 0.359 103 37 California 0.363 998 39 Ohio 0.373 528 40 Pennsylvania 0.384 411 41 Illinois 0.392 556 44 Michigan 0.399 541 46 Massachusetts 0.425 388 47 West Virginia 0.447 123 48 Minnesota 0.450 111 49 New York 0.455 876 50 Vermont 0.466 73 51 Rhode Island 0.483 87 Table A2. State Welfare Use Amongst Single Mothers, 1991-1993 Notes: N refers to the total number of observations (i.e. including welfare recipients and non-recipients) within each state.

Single Mothers’ Employment Rates by Year and State Welfare Use (1991-93) Age of Youngest Child = 0-5

Single Mothers’ Employment Rates by Year and State Welfare Use (1991-93) Age of Youngest Child = 6-12

Single Mothers’ Employment Rates by Year and State Welfare Use (1991-93) Age of Youngest Child = 13-18

Estimation Strategy: Synthetic Cohorts

• Synthetic cohorts of single mothers based on birth year of mother’s

youngest child

• Cells based on cohort (c) and age of the youngest child (a)
• Within each cell, compute average weeks worked
• For each cohort: Expr = cumulative experience = cumulative

sum of weeks worked over the age of the youngest child

• yc,a = wage residuals using 4th order polynomial in mother’s age

and dummies for calendar year, marital status, race, education, age

• f the eldest child, number of kids and birth cohort of the youngest

child

a c a a c a c

Expr y

, , 1 ,

ε δ β β + + + =

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort

Weeks Worked by Youngest Child’s Birth Cohort, Full Age Profile

Cumulative Experience by Birth Cohort, Youngest Child’s Age = 4

Cumulative Experience by Birth Cohort, Youngest Child’s Age = 6

Cumulative Experience by Birth Cohort, Youngest Child’s Age = 8

Cumulative Experience by Birth Cohort, Youngest Child’s Age = 10

Wages vs. Experience, No Controls Observations = Cells based on Cohort and Age of the Youngest Child ˆ 0.0276 (0.0037) β =

Wage Residuals vs. Experience Observations = Cells based on Cohort and Age of the Youngest Child

ˆ 0.0021 (0.0027) β =

Note: wage residuals computed using 4th order polynomial in mother’s age and dummies for calendar year, marital status, race, education, age of the eldest child, number of kids and birth cohort of the youngest child

Discussion

• Evidence based on occupation and industry characteristics:
• Post-reform single mothers with young children moved into

similar jobs as pre-reform employed single mothers

• Post-reform single mothers with older children and more work

experience are in the same types of jobs as single mothers pre-reform single mother with older children

• Overall, no strong evidence of large positive returns to experience

Single Mothers’ Employment, Welfare Use & Age Structure of Children

• Heterogeneity in employment changes based on age of the

mother’s youngest child is robust to including interactions with number of children

• On average, age of the youngest child decreases as number of

children increases

• Intuitively, single mothers with more children tend to continue

having children rather than starting to have children early

2010 , 5,6 12,13 18 0,1,2, 3 1980

1( )*1( )*1( ) .

i n t i i i i i a n t

E year t Nkids n yngch a X γ δ ε

=≤ − − = ≥ =

= = = = + +

∑ ∑ ∑

Distribution of Youngest Child’s Age by Number of Children

yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00378 0.00575 0.00892

• 0.00296

(0.00340) (0.00643) (0.00722) (0.0130) Observations 418 247 154 93 R2 0.052 0.075 0.026 0.108 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00424 0.00517 0.00744

• 0.00129

(0.00434) (0.00857) (0.0123) (0.0152) Observations 418 247 154 93 R2 0.041 0.053 0.009 0.089 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00436 0.000282 0.00178

• 0.00390

(0.00531) (0.00934) (0.0102) (0.0173) Observations 417 246 154 92 R2 0.037 0.048 0.028 0.077 Notes: All regressions are based on cells created based on the youngest child's birth cohort and the age of the youngest child. "yngch" denotes age of the youngest child. Standard errors clustered by child's birth cohort. Table 2: Wages vs. Experience Panel A: Full Sample Panel B: Education ≤ 12 years Panel C: States with High Pre-Reform Welfare Use

yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.000777

• 0.00444
• 0.0125

0.0177 (0.00450) (0.00641) (0.00759) (0.0138) Observations 418 247 154 93 R2 0.192 0.149 0.122 0.109 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00426 0.00129

• 0.00414

0.0167 (0.00480) (0.00725) (0.00881) (0.0162) Observations 418 247 154 93 R2 0.173 0.143 0.104 0.101 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00361

• 0.00244
• 0.0144

0.0308 (0.00520) (0.00738) (0.00778) (0.0150) Observations 418 247 154 93 R2 0.109 0.086 0.070 0.072 Notes: All regressions are based on cells created based on the youngest child's birth cohort and the age of the youngest child. "yngch" denotes age of the youngest child. Standard errors clustered by child's birth cohort. Table 3: Employment vs. Experience Panel A: Full Sample Panel B: Education ≤ 12 years Panel C: States with High Pre-Reform Welfare Use

yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00282 0.00604 0.00299 0.0181 (0.00493) (0.0106) (0.0115) (0.0206) Observations 323 182 119 63 R2 0.046 0.068 0.023 0.123 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00507 0.00399 0.00917

• 0.00667

(0.00429) (0.00627) (0.00787) (0.0132) Observations 340 226 133 93 R2 0.054 0.061 0.020 0.092 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr 0.00147 0.00313 0.00936

• 0.0212

(0.00534) (0.00821) (0.00933) (0.0198) Observations 415 244 154 90 R2 0.048 0.024 0.029 0.031 Notes: All regressions are based on cells created based on the youngest child's birth cohort and the age of the youngest child. "yngch" denotes age of the youngest child. Standard errors clustered by child's birth cohort. Table 4: Wages vs. Experience Panel A: Youngest Child's Birth Cohort ≥ 1985 Panel B: Youngest Child's Birth Cohort = 1980-1998 Panel C: Number of kids ≥ 2

Estimation Strategy: Synthetic Cohorts

• Examine changes in relative wages and relative experience
• Control groups
• Single mothers increase experience relative to married,

education ≤ 12 years mothers

• Single mothers in high pre-reform welfare use states increase

experience relative to single mothers in low pre-reform welfare use states

. ) (

, , 2 , 1 1 , 2 , 1 a c a a c group a c group a c group a c group

Expr Expr y y ε δ β β + + − + = −

yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr

• 0.00258
• 0.00124
• 0.00767

0.0225 (0.00570) (0.0108) (0.0138) (0.0231) Observations 323 182 119 63 R2 0.000 0.000 0.003 0.012 yngch ≤ 18 6 ≤ yngch ≤ 18 6 ≤ yngch ≤ 12 13 ≤ yngch ≤ 18 Expr

• 0.0118

0.0111

• 0.0192

0.0246 (0.0124) (0.0230) (0.0272) (0.0579) Observations 416 245 154 91 R2 0.001 0.001 0.002 0.002 Table 5: Comparisons Across Groups Panel A: Comparing Single Mothers and Married Mothers with Education ≤ 12 Years Panel B: Comparing High Welfare-Use States and Low Welfare-Use States Notes: All regressions are based on cells created based on the youngest child's birth cohort and the age of the youngest child. "yngch" denotes age of the youngest child. Standard errors clustered by child's birth cohort. For the comparisons between married and single mothers in Panel A, we focus on youngest child's birth cohort equal to 1985 and beyond.

Ranking Occupation Fraction in Occupation 1 Cashiers 0.100 2 Nursing aides, orderlies, and attendants 0.050 3 Secretaries 0.048 4 Waiter/waitress 0.040 5 Salespersons, n.e.c. 0.038 6 Housekeepers, maids, butlers, stewards, and lodging quarters cleaners 0.031 7 Cooks, variously defined 0.028 8 Child care workers 0.025 9 Assemblers of electrical equipment 0.022 10 Janitors 0.020 Ranking Occupation Fraction in Occupation 1 Cashiers 0.084 2 Nursing aides, orderlies, and attendants 0.059 3 Salespersons, n.e.c. 0.041 4 Waiter/waitress 0.036 5 Secretaries 0.029 6 Cooks, variously defined 0.029 7 Receptionists 0.027 8 Customer service reps, investigators and adjusters, except insurance 0.026 9 Teacher's aides 0.025 10 Housekeepers, maids, butlers, stewards, and lodging quarters cleaners 0.019 Table 6. Occupation & Industry Characteristics of Employed Single Mothers, Youngest Child Ages 0 through 5 Notes: N refers to the total number of observations in the specified sample period; this number is the used as the denominator when computing the fractions in each occupation. Ranking is based on the fraction in each occupation or industry; the most frequent occupations are assigned the lowest numerical rankings. Occupation categories are based on the 1990 basis categories and industry classifications are based on the 1950 basis categories. Observed between 1998 and 2001 (N = 3602) Observed between 1990 and 1993 (N = 2249)

Ranking Industry Fraction in Industry 1 Eating and drinking places 0.120 2 Medical and other health services, except hospitals 0.083 3 Educational services 0.068 4 Miscellaneous business services 0.060 5 Hospitals 0.058 6 Food stores, except dairy products 0.048 7 General merchandise stores 0.038 8 Hotels and lodging places 0.037 9 Federal public administration 0.029 10 Banking and credit agencies 0.024 Observed between 1998 and 2001 (N = 3601) Ranking Industry Fraction in Industry 1 Eating and drinking places 0.114 2 Medical and other health services, except hospitals 0.095 3 Educational services 0.087 4 Miscellaneous business services 0.081 5 Food stores, except dairy products 0.045 6 General merchandise stores 0.043 7 Hospitals 0.039 8 Banking and credit agencies 0.034 9 Welfare and religious services 0.031 10 Hotels and lodging places 0.025 Table 6. Occupation & Industry Characteristics of Employed Single Mothers, Youngest Child Ages 0 through 5 Observed between 1990 and 1993 (N = 2247) Notes: N refers to the total number of observations in the specified sample period; this number is the used as the denominator when computing the fractions in each occupation. Ranking is based on the fraction in each occupation or industry; the most frequent occupations are assigned the lowest numerical rankings. Occupation categories are based on the 1990 basis categories and industry classifications are based on the 1950 basis categories.

Ranking Occupation Fraction in Occupation 1 Nursing aides, orderlies, and attendants 0.078 2 Secretaries 0.064 3 Housekeepers, maids, butlers, stewards, and lodging quarters cleaners 0.047 4 Assemblers of electrical equipment 0.042 5 Textile sewing machine operators 0.036 6 Cooks, variously defined 0.036 7 Cashiers 0.028 8 Janitors 0.025 9 Packers, fillers, and wrappers 0.022 10 Bookkeepers and accounting and auditing clerks 0.022 Ranking Occupation Fraction in Occupation 1 Nursing aides, orderlies, and attendants 0.085 2 Housekeepers, maids, butlers, stewards, and lodging quarters cleaners 0.044 3 Secretaries 0.042 4 Cooks, variously defined 0.036 5 Cashiers 0.035 6 Supervisors and proprietors of sales jobs 0.031 7 Customer service reps, investigators and adjusters, except insurance 0.031 8 Child care workers 0.026 9 Health aides, except nursing 0.019 10 Waiter/waitress 0.019 Notes: N refers to the total number of observations in the specified sample period; this number is the used as the denominator when computing the fractions in each occupation. Ranking is based on the fraction in each occupation or industry; the most frequent occupations are assigned the lowest numerical rankings. Occupation categories are based on the 1990 basis categories and industry classifications are based on the 1950 basis categories. Table 7. Occupation & Industry Characteristics of Employed Single Mothers, Youngest Child Ages 13 through 18 Observed between 1990 and 1993 (N = 360) Observed between 2007 and 2010 (N = 1124)

Observed between 1990 and 1993 (N = 360) Ranking Industry Fraction in Industry 1 Educational services 0.108 2 Hospitals 0.106 3 Medical and other health services, except hospitals 0.083 4 Miscellaneous business services 0.058 5 Federal public administration 0.044 6 Eating and drinking places 0.039 7 Banking and credit agencies 0.033 8 Apparel and accessories 0.031 9 Electrical machinery, equipment, and supplies 0.028 10 Welfare and religious services 0.025 Observed between 2007 and 2010 (N = 1124) Ranking Industry Fraction in Industry 1 Medical and other health services, except hospitals 0.127 2 Educational services 0.107 3 Eating and drinking places 0.067 4 Hospitals 0.063 5 Miscellaneous business services 0.051 6 Miscellaneous professional and related services 0.050 7 General merchandise stores 0.035 8 Food stores, except dairy products 0.029 9 Federal public administration 0.026 10 Local public administration 0.026 Table 7. Occupation & Industry Characteristics of Employed Single Mothers, Youngest Child Ages 13 through 18 Notes: N refers to the total number of observations in the specified sample period; this number is the used as the denominator when computing the fractions in each occupation. Ranking is based on the fraction in each occupation or industry; the most frequent occupations are assigned the lowest numerical rankings. Occupation categories are based on the 1990 basis categories and industry classifications are based on the 1950 basis categories.

Survey Year N % Non- white Fraction with ≤12 years of Schooling Median Mother's Age Fraction with Age

• f Youngest Child ≤

5 Fraction in Full-time Employment in Previous Year Fraction in Part-time Employment in Previous Year Median Wage 1990 1447 0.613 0.773 27 0.655 0.345 0.073 10.378 1991 1571 0.597 0.781 28 0.679 0.326 0.086 9.767 1992 1582 0.603 0.753 28 0.667 0.312 0.082 9.838 1993 1659 0.601 0.716 28 0.664 0.306 0.095 9.254 1994 1757 0.579 0.680 28 0.677 0.325 0.090 9.274 1995 1722 0.546 0.678 28 0.650 0.347 0.093 9.403 1996 1590 0.554 0.669 28 0.645 0.352 0.098 9.378 1997 1736 0.525 0.658 28 0.640 0.390 0.112 9.200 1998 1711 0.525 0.631 28 0.610 0.431 0.129 9.733 1999 1703 0.521 0.623 28 0.611 0.479 0.122 9.865 2000 1712 0.515 0.635 28 0.605 0.488 0.104 10.296 2001 3052 0.489 0.632 28 0.618 0.493 0.110 10.770 2002 3044 0.507 0.634 29 0.590 0.489 0.113 11.123 2003 3129 0.493 0.612 28 0.607 0.479 0.117 11.459 2004 2988 0.498 0.605 29 0.608 0.468 0.106 11.199 2005 3009 0.497 0.612 28 0.617 0.454 0.114 10.915 2006 3084 0.494 0.584 29 0.606 0.449 0.115 10.556 2007 3004 0.481 0.574 29 0.626 0.460 0.118 10.844 2008 3025 0.493 0.584 29 0.609 0.465 0.117 11.055 2009 3147 0.468 0.560 29 0.615 0.449 0.125 10.399 2010 3324 0.451 0.563 29 0.601 0.408 0.121 11.218 Notes: Data from IPUMS CPS. The sample is restricted to never married mothers between ages 19 and 44. See Table A1 for sample restriction

• details. Median weeks worked and median wage are conditional on employment. Wages are CPI adjusted to 2009 dollars. Wages are computed as

total wage and salary income divided by the product of weeks worked and usual hours worked per week. Table 1: Summary Statistics for Never Married Mothers

Sample Restriction # of Observations All Women 3497473 Never Married Women 1446241 Ages 19 through 44 349980 # of Own Children > 0 61188 Dropping if Age of Oldest Child + 15 > Mother's Age 59458 Dropping if Age of Oldest Child + 45 ≤ Mother's Age 59458 Dropping if Age of Oldest Child - Age of Youngest Child > 20 59429 Table A1: CPS Sample Restrictions, Survey Years 1970-2010 Notes: Data from IPUMS CPS.

Ranking State Fraction Reveiving Welfare N 1 Nevada 0.136 110 2 Alabama 0.155 193 3 Idaho 0.173 104 4 Virginia 0.183 115 5 Texas 0.212 628 6 Georgia 0.214 159 7 Delaware 0.216 125 8 Utah 0.234 94 9 Arizona 0.239 134 10 New Mexico 0.239 163 11 Arkansas 0.248 153 12 Missouri 0.252 135 13 South Dakota 0.252 115 14 North Carolina 0.255 436 15 Kansas 0.257 136 16 Florida 0.265 578 16 Oklahoma 0.265 136 18 Indiana 0.268 157 19 Colorado 0.271 118 20 Iowa 0.278 126 21 Montana 0.279 147 22 Maryland 0.283 106 23 New Hampshire 0.293 75 24 Mississippi 0.308 237 25 Hawaii 0.309 94 26 New Jersey 0.311 440 27 Nebraska 0.314 105 28 South Carolina 0.320 181 29 Washington 0.327 101 30 Maine 0.330 100 31 Alaska 0.333 168 32 Wyoming 0.337 104 33 Wisconsin 0.338 151 34 District of Columbia 0.345 177 35 Tennessee 0.355 169 36 Oregon 0.359 103 37 California 0.363 998 38 Louisiana 0.371 167 39 Ohio 0.373 528 40 Pennsylvania 0.384 411 41 Illinois 0.392 556 42 Kentucky 0.393 150 43 North Dakota 0.397 116 44 Michigan 0.399 541 45 Connecticut 0.414 87 46 Massachusetts 0.425 388 47 West Virginia 0.447 123 48 Minnesota 0.450 111 49 New York 0.455 876 50 Vermont 0.466 73 51 Rhode Island 0.483 87 Table A2. State Welfare Use Amongst Single Mothers, 1991-1993 Notes: N refers to the total number of observations (i.e. including welfare recipients and non-recipients) within each state.